Production and Cost of Production

1. Complete the following table by calculating Marginal Product (MP) and Average Product
(AP) from the given data.

Inputs of Labor Total Product (TP) Marginal Product Average Product

(MP) (AP)
0 0
1 15
2 34
3 51
4 65
5 74
6 80
7 83
8 82

A. Plot the total product, marginal product and average products and explain in detail the
relationship between each pair of curves. Explain why MP first rises, then declines,
and ultimately becomes negative.

2. A firm has Fixed Cost of 60 and Variable Cost as indicated in the table below. Complete the
table.

Total Variable Total Cost Average Average Average Marginal

Product Cost (VC) (TC) Fixed Cost Variable Total Cost Cost (MC)
(TP) (AFC) Cost (ATC)
(AVC)
0 0
1 45
2 85
3 120
4 150
5 185
6 225
7 270
8 325
9 390
10 465

A. Graph Fixed Cost, Variable Cost and Total Cost.

B. Graph Average Fixed Cost, Average Variable Cost, Average Total Cost and Marginal
Cost